Sandhill Inc. has 4 product lines: sour cream, ice cream, yogurt, and butter. Demand of individual products is not affected by changes inother product lines. 30% of the fixed costs are direct, and the other 70% are allocated. Results of June follow:Sour CreamIce CreamYogurtButterTotalUnits sold2,4006004802403,720Revenue$12,000$24,000$12,000$24,000$72,000Variable departmental costs7,20015,6005,0405,76033,600Fixed costs6,0002,4003,6008,40020,400Net income (loss)$(1,200)$6,000$3,360$9,840$18,000Prepare an incremental analysis of the effect of dropping the sour cream product line. (Enter negative amounts using either anegative sign preceding the number e.g. -45 or parentheses e.g. (45).)

The incremental analysis is performed to analyze the effect of decision on the business or its…

Answered: Sandhill Inc. has 4 product lines: sour…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Cullumber Farms reports the following results for the month of November: Sales (11,100 units) Variable costs Contribution margin Fixed costs Net income $688,200 477,300 210,900 122,100 $88,800 Management is considering the following independent courses of action to increase net income. 1. Increase selling price by 5% with no change in total variable costs. 2. Reduce variable costs to 66% of sales. 3. Reduce fixed costs by $10,000.
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Skull Company makes snowboards and uses the total cost method in setting product price. Its costs for producing 19,500 units follow. The company targets a 10.0% markup on total cost. Variable Costs per Unit Direct materials Direct labor Overhead Selling, general and administrative Fixed Costs (total) Overhead Selling, general and administrative $ 119 44 39 8 1. Total cost per unit 2. Markup per unit 3. Selling price per unit $ 480,000 456,000 1. Compute the total cost per unit if 19,500 units are produced. 2. Compute the dollar markup per unit. 3. Compute the selling price per unit. (For all requirements, round your final answers to the nearest dollar amounts.)
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Vegas Company has the following unit costs: Variable manufacturing overhead $ 30 Direct materials 25 Direct labor 24 Fixed manufacturing overhead 17 Variable marketing and administrative 8 Vegas produced and sold 13,500 units. If the product sells for $115, what is the contribution margin? Multiple Choice $148,500 $486,000 $256,500 $378,000
Bob Co. has two departments: QR, and XY, which produce high quality hockey sticks. The company has provide the following information for the month of April: QR XY Total Sales $ 9,000,000 $ 2,200,000 $ 11,200,000 Variable Costs 4,500,000 950,000 5,450,000 Contribution Margin 4,500,000 1,250,000 5,750,000 Fixed Expenses 3,500,000 1,300,000 4,800,000 Operating Income (Loss) 1,000,000 - 50,000 950,000 Bob Co. has conducted an analysis of the costs involving XY after a poor performance in April and it was determined that the following would occur if the XY department ceased operations: 1. $450,000 in fixed expenses of XY would be eliminated by ceasing operations. The remaining $850,000 are sunk costs that cannot be recovered. 2. The sales in the QR department would increase 13% if XY were to cease operations. REQUIRED A) What would be the effect on operating income if the XY product line is dropped? B) Should the XY product line be dropped? Briefly explain. C) Unrelated to parts A & B of…
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C. ABC Company has 3 stores. The following data were made available in March 20X3: Sales Variable Costs Contribution Margin Traceable Controllable Fixed Cost Performance Margin Traceable Non-Controllable Fixed Cost Segment Margin Store 1 650,000 390,000 260,000 80,000 180,000 100,000 80,000 2. Store 2 1,200,000 780,000 420,000 200,000 220,000 120,000 100,000 Store 3 800,000 400,000 400,000 180,000 220,000 110,000 110,000 Additional information: 1. Store 1 is the oldest branch. Stores 1 and 3 are both in a sub-urban area, while Store 2 is the newest branch and is in a highly urbanized city. The company is considering an additional advertising cost for P21,000 to boost sales. The following alternatives are being considered: a. Advertise all the stores which will increase individual store's sales by 5%. b. Advertise Store 1 to increase its sales by P300,000 but will decrease sales of Store 3 by P200,000. REQUIRED: Determine which of the 2 alternatives, a or b, will benefit ABC Company…
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Cove's Cakes is a local bakery. Price and cost information follows: Price per cake Variable cost per cake Ingredients $ 14.61 2.31 1.13 Overhead (box, etc.) 0.28 Fixed costs per month 4,464.90 Direct labor Required: 1. Determine Cove's break-even point in units and sales dollars. 2. Determine the bakery's margin of safety in sales dollars if it currently sells 480 cakes per month. 3. Determine the number of cakes that Cove must sell to generate $1,900 in profit. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine Cove's break-even point in units and sales dollars. Note: Round your Break-Even Units answer to the nearest whole number. Round your other intermediate calculations and sales dollars answer to 2 decimal places. Break-Even Units Break-Even Sales Dollars Cakes
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